Several large health insurers have announced that they would suspend child-only insurance plans “rather than comply with a new federal healthcare law that bars them from rejecting youngsters with preexisting medical conditions.” Most Democrats have remained mum about how to address the problem, but this afternoon Rep. Loretta Sanchez (D-CA) appeared on MSNBC’s Chris Matthews and suggested that states should prohibit such “bad faith” insurers from participating in the exchanges in 2014. Under the health care law, states can exclude certain insurers from the exchanges if they demonstrate a pattern or practice of excessive or unjustified premium increases.
Sanchez said that states — rather than the federal government — would be primarily responsible for holding insurers accountable and encouraged Gov. Arnold Schwarzenegger to sign a California bill that would prohibit insurers that stop offering child-only policies, from participating in the exchanges for a period of five years:
SANCHEZ: So obviously, one of those things is when we do set up exchanges in three years, we are going to get to choose. We are going to have a commission that is going to get to choose what policies are put in there. Certainly, I would call a company that is not writing children’s insurance a bad faith company and I would suggest they wouldn’t be found in that new 30 to 40 million-person market that we will create.
Some insurers may have decided to leave the child-only market because the new take-all-kids regulation made that product less profitable, but it’s also possible that other companies suspended their plans in order to avoid possible premium increases (that could have made them ineligible for the exchanges.) Still, the very notion that members of Congress are calling on states to use their regulatory authority to clamp down on “bad faith” insures, is quite encouraging.